SURO CAPITAL CORP.
For the period ended Apr 29, 2026. Filed Apr 29, 2026.
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Apr 29, 2026 · Filed Apr 29, 2026
NSLR$5.76+2.9%Stored close · as of Nov 6, 2026
Contents
Potential Drawbacks of the Externalization
Although the Board believes that the Externalization is in the best interests of the Company and its stockholders, stockholders should carefully consider the following potential drawbacks of the Externalization in evaluating the Advisory Agreement Proposal:
| ● | Introduction of Advisory Fees Not Previously Borne by the Company. Following the Externalization, the Company will pay the Adviser a Base Management Fee and, with respect to Eligible Investments, an Incentive Fee (consisting of the Income-Based Fee and the Capital Gains Fee), in each case as described under “– Terms of the Advisory Agreement and the Administration Agreement.” The Company does not currently pay any such advisory fees as an internally managed BDC. Although the Company’s existing portfolio of Pre-Existing Investments is excluded entirely from the Incentive Fee calculation, the Base Management Fee will be calculated based on the Company’s gross assets (including Pre-Existing Investments) and will be payable from and after the Effective Date. In addition, as the Company’s portfolio shifts over time to include a larger proportion of Eligible Investments, the aggregate fees payable to the Adviser may increase as the Incentive Fees payable by the Company pursuant to the terms of the Advisory Agreement increase. |
| ● | Conflicts of Interest. The Externalization may give rise to certain conflicts of interest not present under the Company’s current internally managed structure, including conflicts relating to (i) the economic interests of the Company’s executive officers in the Adviser as joint owners with the Magnetar JV Entity, (ii) the Adviser’s ability to provide investment management services to other clients and to sponsor other products in the future, and (iii) the Adviser’s discretion in determining the timing and composition of investments and dispositions, which may influence the amount and timing of the Incentive Fee payable to the Adviser. See “– Conflicts of Interest Relating to the Externalization” below for additional information regarding potential conflicts of interest. |
| ● | Loss of Direct Employment Relationship. Following the Externalization, the Company will have no employees, and all persons providing investment management, administrative and compliance services to the Company will be employees of the Adviser, the Administrator or their affiliates. As a result, the Company will not directly determine the compensation, retention or allocation of time of the Adviser’s investment professionals. Instead, the Company will rely on its contractual rights under the Advisory Agreement and the Administration Agreement, and the Board’s ongoing oversight of the Adviser, including the annual approval process applicable to the Advisory Agreement under Section 15(c) of the 1940 Act. |
| ● | Anticipated Benefits May Not Be Realized. There can be no assurance that the anticipated benefits of the Externalization will be realized. The projected near-term expense savings set forth under “– Comparison of Fiscal Year 2025 Operating Expenses and Pro Forma Operating Expenses under Advisory Agreement and Administration Agreement” are based on assumptions about the Company’s asset base, portfolio composition and overhead allocations that may not prove correct. The anticipated sourcing, due diligence and co-investment benefits from the Company’s relationship with Magnetar depend on factors outside the Company’s control, and the Company’s ability to grow depends on market and other factors outside of the Company’s control. |
| ● | Ongoing Fees Compared to Historical Compensation Expense. The Base Management Fee is a fixed percentage of gross assets, and unlike employee compensation under an internally managed structure, is not subject to year-over-year adjustment based on Company performance or discretionary bonus decisions made by the Compensation Committee. Accordingly, in periods of declining asset values or poor investment performance, the aggregate fees payable to the Adviser may be higher than the compensation the Company would have paid to investment personnel under its internally managed structure. |
After considering the foregoing potential drawbacks, the Board concluded that, on the totality of the information presented, the expected benefits of the Externalization outweigh the potential drawbacks. See “– Board Approval of the Advisory Agreement” below for a further description of the Board’s consideration of the countervailing factors.
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